When you are in financial difficulty it can be hard to know exactly where to turn. Loan sharks has a negative connotation for a good reason, and over the years they have caused many problems for low-income people who have been in search of financial assistance, but have instead been placed in greater difficulty. There are many credible options open to people in need of help over a short period of time, from asking for an advance in the workplace or asking a friend or relative for some help, to taking out a short-term loan from a payday loan lender. As long as you borrow responsibly, you can get out of the trouble you are in without it jeopardising your future even further, as would be the case when borrowing money from a loan shark.
Here, we look at the definition of a loan shark, and what choices you have as an alternative. It might sometimes feel like you have no choice at all when facing dire financial circumstances, but you always do, and you should always talk to people rather than bottling up your worries and endangering your mental wellbeing.
You’ll have seen plenty of news stories about loan sharks over the years. It is an illegal lending stream where low-income people are often targeted, as they are the most desperate in terms of needing cash. A loan shark might at first seem friendly and that they are there to help, but it is never a straightforward process to borrow money from them, and it should always be avoided, even if you feel there are no other options open to you.
The interest rates that loan sharks apply to a personal loan can be absolutely staggering, and although they will remain friendly to you for as long as you keep up your repayments, the moment you slip and miss a payment, or you are slightly late with a payment, the troubles will begin. You’ll pay a much higher interest than you would through any form of legal borrowing, even though payday lenders who are known to attach high interest to what are designed to be short-term loans. Beyond that, late and missed payments to a loan shark could be met by physical and psychological intimidation and harassment, and pressure to borrow even more money just to cover the cost of the loan from a loan shark.
It is quite easy to spot a loan shark, as they are unlikely to offer you any form of paperwork or official documents to sign or keep, such as a credit agreement. They are also unlikely to provide you with information up front that could be useful to you, such as the amount of interest you will owe on top of the initial loan sum. It is also likely that you will find you are faced with additional charges without prior warning, or are told you are not permitted to clear a debt in full if you have the means to do so beyond the agreed regularity of payments currently.
Always look for legitimate, legal lending streams if you are looking for financial help. There are responsible and reputable payday loan companies that can offer simple and fast loans, as well as banks and other traditional lenders with access to longer and larger loans should you require them.